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Fraud*According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain*As defined in Wikipedia

Sunday, July 31, 2011

Just the anticipation of financial reform is changing Goldman Sachs's business policies. Apparently, Goldman Sachs is asking traders not to take huge risks and, as a result, the big bonuses are being trimmed. Goldman Sachs is just another investment bank and not particularly exceptional except sometimes exceptionally bad. Revenue has dropped as already predicted.

Maybe Goldman Sachs should call itself a hedge fund in order to take more risks and make richer bonuses. Then investors will know what they are dealing with. Maybe the shine is permanently off Goldman Sachs.

NEW YORK (Reuters) - More than a dozen traders have quit Goldman Sachs Group Inc's (NYSE:GS - News) North American government bonds and derivatives trading desk in New York in recent months as the bank takes fewer risks and big bonuses for ambitious traders dry up.

Goldman has been handing out promotions and better pay to its salespeople rather than the traders who manage the bank's inventory of securities and derivatives, people familiar with the bank's operations said.

The changes reflect Goldman's shift toward client trading and away from making money by betting for its own account, those sources said. Weak trading in general has compounded Goldman's difficulties as it struggles to earn profits from clients without the help of its market bets, analysts said.

It makes sense for Goldman management to reward sales staff over traders these days, said Susquehanna Financial Group analyst David Hilder.

"The client franchise is paramount," said Hilder. "You need sales people to deal with and talk to the clients. Over the long term, that's more important than a few guys trading bonds."

Among the recent departures is Brian Mooney, an interest-rate derivatives trader who spent 22 years at Goldman before joining Bank of America Corp's (NYSE:BAC - News) Merrill Lynch this week, according to three sources who know about the move.

Mooney's exit follows that of Glenn Hadden, the former head of Goldman's U.S. Treasury bond trading desk, who left last year to run Morgan Stanley's (NYSE:MS - News) global rates trading group in January.

At least nine other traders from the rates desk have left for jobs at competitors this year, including UBS AG (VTX:UBSN.VX - News), Nomura Holdings Inc (Tokyo:8604.T - News), Jefferies Group Inc (NYSE:JEF - News) and JPMorgan Chase & Co (NYSE:JPM - News), or hedge funds like Stark Investments near Milwaukee. Among their ranks were more junior traders, some of whom were seen as rising stars at Goldman.

Goldman has been laying off traders since March, but there has also been a flood of voluntary exits that began late last year and continued through the second quarter, sources said.

Colin Corgan, a respected partner on the rates desk, retired in late 2010. In March, Craig Reynolds, a former top interest-rate swaps trader at Goldman, left to become head of Bank of America Merrill Lynch's North American interest-rate trading desk.

Goldman has given additional responsibilities to remaining staffers and promoted others. For instance, Jonathan Hall, a rates trader in London, was tapped to oversee the entire U.S. rates trading operation after Hadden left. But the bank has kept many of the seats empty as it looks to keep staffing levels tight.

Some traders that have left the bank said they fear Goldman may turn into just another investment bank, and they wanted to leave while it was still seen as prestigious on Wall Street.

"Working for Goldman is no longer different than working for anybody else," said one former Goldman trader who left this year. "At the same time, if you have Goldman on your resume, that's still a premium. People are monetizing the Goldman premium now because two years from now you won't be able to."

"Goldman Sachs is totally committed to the interest rate products business," said spokesman Michael DuVally. The bank is staffed appropriately for the business, he added.

SPECTER OF THE VOLCKER RULE

Goldman's North American rates-trading desk handles some of the most actively traded markets in the world, including U.S. Treasury bonds and U.S. dollar interest-rate swaps.

The desk is to some degree shielded from a financial reform provision called the Volcker rule that will prevent banks from gambling on market direction.

The rule is not in effect yet, but even once it is implemented, banks will still be allowed to take proprietary positions in the Treasury market and hedge against risk using related derivatives.

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